The Power Sector Assets and Liabilities Management Corp. (PSALM) was able to cut its financial obligations by P27.18 billion and collect P98.37 billion in revenues and receivables in 2019 through the efficient implementation of its liability management strategies.

In a report to Finance Secretary and PSALM chairman Carlos Dominguez III, the state-owned firm said its revenues and receivables came from privatization proceeds, power sales, collections from delinquent and overdue accounts, and proceeds from the Universal Charges (UCs).

Its collection efficiency of 93.5 percent in 2019 for current power sales enabled this firm to collect P11.76 billion from its power customers, PSALM president Irene Joy Besido-Garcia said in her report.

Garcia said PSALM was able to collect P4.32 billion in overdue and delinquent accounts by offering borrowers flexible payment schemes through restructuring agreements or special payment agreements. This collection surpassed PSALM’s target of P4.12 billion.

“These flexible payment schemes encouraged entities and electric cooperatives to viably settle their outstanding obligations,” Garcia said.

PSALM also collected P74.66 billion from its privatization initiatives, while proceeds from the UC (Universal Charge) for Stranded Contract Costs (SCC) and UC for Stranded Debt (SD) brought in another P7.63 billion for the firm in 2019, Garcia added.

From P449.19 billion in 2018, PSALM cut its principal financial obligations to P422.011 billion in 2019, down by 6.05 percent or P27.18 billion, or an improvement over the firm’s original target of slashing its debt by P15.21 billion.

Garcia reported that through cost-cutting measures and additional revenue collections, PSALM was able to drastically lower its overhead expenses to just 4.67 percent in relation to its total income due, a big improvement of nearly twice its goal of 8.92 percent.

PSALM also surpassed its target of attaining a 4.88 percent Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) Margin of its Remaining Power Assets by achieving an even better EBITDA Margin of 14.07 percent, Garcia said.

On the UC remittances of its collecting entities, Garcia reported collections of P20.115 billion out of the total of P20.51 billion in receivables, which translates into a 98.08 percent collection efficiency.

Garcia said PSALM was also able to disburse 100 percent of the proceeds from the UC-Missionary Electrification Charge to the National Power Corp. (Napocor)’s Small Power Utilities Group (SPUG) in the amount of P13.241 billion and to renewable energy (RE) developers, P18 million.

For 2020, Garcia said among PSALM’s goals is the liquidation of its maturing financial obligations with a target net reduction amounting to P11.943 billion.

It is also set this year to privatize the Malaya Thermal Power Plant (TPP) in Pililia, Rizal and to start the privatization activities for the Caliraya-Botocan-Kalayaan Hydroelectric Power Complex in Kalayaan, Laguna.

PSALM is also targeting to maintain its 93-percent collection efficiency on current power sales by collecting P10.47 billion this year and another P754 million from delinquent and overdue accounts, Garcia said.

Through the efficient administration of the UCs, Garcia said PSALM is also aiming to collect P30.59 billion this year, equivalent to a collection efficiency of 98 percent.

“PSALM will also diligently comply with the implementing rules and regulations (IRR) of the Murang Kuryente Act, once they are promulgated, including the submission of requirements to oversight agencies to ensure adequate annual allocation from the P208 billion Malampaya Fund for stranded contract costs and stranded debts, including anticipated shortfalls,” Garcia said.

Under its Strategic Plan approved by the PSALM Board, the firm will also dispose this year a total of 81 lots with a total combined area of over 1 million square meters.

Garcia said PSALM will also fully implement its Restructuring Plan as approved by the Governance Commission for Government-Owned and -Controlled Corporations (GCG) and strive to successfully litigate its pending cases in court this year.

In her report to Secretary Dominguez, Garcia further cited the following accomplishments of PSALM in 2019:

· Engaged the Congress in the passage of the Murang Kuryente Act (Republic Act or RA 11371), which allocates P208 billion from the Malampaya Fund to cover shortfalls of PSALM and effectively pay for the SCC and SD of Napocor. This law will save consumers from the additional UC imposition of about 86 centavos per kilowatt hour (kWh);

· Serviced maturing financial obligations, including borrowing costs and interests, amounting to P108.12 billion;

· Successfully sold 166 lots in La Union, Misamis Oriental, Cebu, Zambales, Ilocos Norte and Camarines Sur, which raised revenues of P1.47 billion combined, by adopting new disposal modes and simplifying public bidding procedures to attract more bidders;

· Mitigated foreign exchange (forex) risks by increasing the peso share in PSALM’s debt portfolio from 21.8 percent as of end-2018 to 25.2 percent in 2019;

· Lowered the average interest on its borrowings from 5.87 percent in end-2018 to 5.07 percent in 2019, enabling PSALM to realize cost savings on interest charges;

· Through Executive Order (EO) No. 88, PSALM was able to reduce its Real Property Tax (RPT) liability for 5 independent power producer (IPP) plants to P205.5 million from P1.096 billion, which meant savings of P890.55 million for the government;

· Entered into short-term lease agreements on certain assets that are not yet scheduled for privatization, which raised additional lease revenues of P17.31 million;

· Successfully resolved pending litigation issues involving Aboitiz Energy Solutions Inc, Vivant Energy Corp., and Northern Renewables, which yielded a combined amount of P978.08 million for PSALM;

· Resolved Warrant of Levy and Notice of Sale at Public Auction for the liability imposed upon PSALM and Napocor for franchise tax relative to the Bauang DPP Land. As a result, PSALM was able to dispose of the Bauang property in La Union in the amount of P524.21 million; and

· Obtained ISO 9001: 2015 Certification from a 3rd Party Certifying Body– the Socotec Certification Philippines (SOCOTEC)–on December 4, 2019 for Quality Management System after passing the corporate-wide audit.

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